By Teresa Rivas

Second-quarter earnings season is well underway, after Alcoa (AA) delivered a better-than-expected report earlier this week, followed by J.P. Morgan (JPM) and Wells Fargo (WFC) this morning.

Yet despite these beats, the Street is still too pessimistic, according to J.P. Morgan analyst Thomas Lee and his team. They have a note out today, detailing how drags from the Sequester, unsettling data from China and a rise in interest rates have sapped confidence about second-quarter results and gross domestic product acceleration in the second half of the year.

By contrast, Lee is modeling for S&P 500 second-quarter earnings per share to come in at a record $27.50, a 6% year-over-year increase and 3% above the consensus estimate of $26.75. He thinks that financials will help drive the upside surprise, and notes that of the approximately 5% of S&P 500 companies to report so far, 65% have beaten by 2% or more.

Lee sees a number of factors helping to boost corporate earnings: Europe is healing, however gradually; the recovery in housing remains on track despite higher interest rates, and on a year-over-year basis, sales and earnings are improving from trough levels.

“Financials represent $4.25 of the $0.80 increase in 2Q13E EPS vs. 2Q12,” he writes. “That is, Financials are more than offsetting the drag from Cyclicals (Technology -$1.95) and Healthcare (-$1.25). But as we move into 2H, the drag from Cyclicals earnings declines should fade, and we expect to see high-single-digit growth in 2H.”

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